In the history of Oregon politics, there are few things voters have hated more than a sales tax.

But when voters
approved a property tax limit more than two decades ago, the state’s
political leaders said it was only a matter of time before Oregonians
would get so fed up with dwindling services and cuts to public schools
that they would change their minds.

Three veteran Democratic lawmakers say it’s time.

The three will push a
plan in the 2013 Legislature that would use revenue from a 5 percent
sales tax to make big cuts in income tax rates, provide property tax
breaks and still raise an extra $1 billion a year for the state budget.

The proponents claim the extra $1 billion would come from sources not currently paying taxes.

“If everybody’s tax
burden stays the same and we can bring in $1 billion extra every year
for education, that sounds pretty good,” says Sen. Mark Hass
(D-Beaverton).

The idea is being
pushed by Hass, Sen. Ginny Burdick (D-Portland) and Rep. Tobias Read
(D-Beaverton). Hass and Read especially are feeling heat from
constituents who say state funding levels are starving local schools.
The Beaverton School District laid off more than 100 teachers this year.

“There’s an urgency in Beaverton for more revenue now,” Read says.

But they have an entire state to convince—including Gov. John Kitzhaber, a fellow Democrat, who tells WW
he wants tax reform but doesn’t think the time will be right before
2014. Kitzhaber wouldn’t have to sign the measure—legislators would send
it directly to voters—but his resistance could make an already daunting
task even more difficult.

“It’s not a
non-starter,” he says. “I think the challenge is to have enough time to
have a conversation about the importance of [tax] stability.”

Voters have rejected
the key component of the lawmakers’ concept—a sales tax—nine times.
Still, it’s been a bipartisan issue in Oregon. Two governors, Vic
Atiyeh, a Republican, and Barbara Roberts, a Democrat, unsuccessfully
proposed tax reforms based on sales taxes. The last major legislative
reform proposal came in 2007—courtesy of two Republican and two
Democratic senators—but resulted only in a study.

The mechanics of tax
reform are daunting: Three-fifths of the House and the Senate would have
to go along. Sales tax proposals have historically been opposed not
only by anti-taxers but liberals who see sales taxes as regressive,
hitting low-income people hardest.

The plan offered by
Hass, Read and Burdick would impose a 5 percent sales tax that would
exempt necessities such as groceries, utilities and prescription drugs.

The plan then calls
for deep cuts in income tax rates: down to 6 percent for most
Oregonians. That’s one-third off the current rate of 9 percent most
Oregonians pay.

The plan also calls
for a property tax cut: Homeowners wouldn’t have to pay taxes on the
first $50,000 of a home. That’s a sizeable benefit considering the
average assessed value of a home in Multnomah County is $182,000. And
the plan includes lower capital gains taxes—a priority for the business
lobby.

All of these tax
breaks would add up to $5.3 billion in the 2015-2017 biennium. And that
would leave $1.9 billion over two years for the state budget and
schools.

Kitzhaber wants
legislators to first deal with the priorities he’s set out for 2013:
reforming the state’s public pensions, and following through on changes
to the state’s education and health-care systems.

House GOP spokesman
Nick Smith says his caucus is open to tax reform but skeptical. “We
don’t have a revenue problem, we have a jobs problem,” Smith says.

But Ryan Deckert,
Oregon Business Association president, says his members strongly support
some version of the Hass/Burdick/Read plan. “This is where the game
is,” Deckert says. “If you want to fund the ambitious education goals we
have, this is where we have to go.”

“We need to challenge
the myths,” Hass says. “It’s hard to tell parents that the long-term
funding solution to school finance is tax reform, but we’re not doing
anything for a year or two or even longer.”

FACT: Oregon voters last turned down a sales tax in
1993 by a 3-to-1 margin. The highest vote a sales tax ever received was
29 percent. That was in 1934.

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